State of La. v. Litton Mortg. Co.
| Decision Date | 30 March 1995 |
| Docket Number | No. 94-30343,94-30343 |
| Parties | , 32 Fed.R.Serv.3d 519, RICO Bus.Disp.Guide 8800 STATE OF LOUISIANA, Plaintiff-Appellant, v. LITTON MORTGAGE COMPANY, Class Representative, and all other similarly situated mortgage servicing companies, Defendant, BISYS Loan Services, Inc., Class Representative, and all other similarly situated mortgage servicing companies fka Litton Mortgage Servicing Center, Inc., et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Stephen L. Dunne, Robert L. Hackett, Kevin L. Camel, Hackett & Dunne, New Orleans, LA, for appellant.
Roger A. Stetter, Nicole D. Martin, Lemle & Kelleher, New Orleans, LA, for BISYS.
Monica T. Surprenant, Baldwin & Haspel, L.L.C., New Orleans, LA, for Magnolia Federal Bank.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before VAN GRAAFEILAND *, JOLLY and WIENER, Circuit Judges.
Plaintiff-Appellant, the State of Louisiana ("the State") appeals two district court orders, one granting the Defendants-Appellees' Litton Mortgage Company, Inc.--now BISYS Loan Services, Inc.--("Litton/BISYS") and Magnolia Federal Bank for Savings ("Magnolia") (collectively "Defendants") motions to dismiss the State's complaint for failure to state a claim, and the other denying the State's subsequent motion for leave to amend its complaint. The State asserts that the court erred in (1) dismissing its complaint on the ground that Section 10 of the Real Estate Settlement and Procedures Act ("RESPA"), 12 U.S.C. Sec. 2609(a), does not imply a right of private action, and (2) denying its motion to amend on alternative grounds: that the dismissal of the State's complaint constituted a dismissal of the State's entire action, and that the circumstances underlying the State's motion to amend--particularly the State's effort to resurrect an abandoned claim--did not justify allowing yet another amendment.
We agree with the district court's legal ruling that Section 10 of RESPA does not imply a private cause of action. It follows that the court did not err in dismissing the State's complaint for failure to state a claim under RESPA. With respect to the State's motion for leave to amend, we conclude that the court erred in denying the motion on the ground that the dismissal of the State's complaint constituted a dismissal of the entire action. We are satisfied, however, that this error is harmless by virtue of the fact that the court also addressed the merits of the State's motion to amend and did not abuse its discretion in denying that motion. We therefore affirm the court's order to that effect.
In November 1993 the State filed an action on behalf of Louisiana homeowners against Litton/BISYS and other similarly situated After a preliminary court conference the State amended its complaint a second time, asserting only the RESPA and UTP claims against the defendants individually. Litton/BISYS and Magnolia filed motions to dismiss the complaint. The court granted these motions, concluding that Section 10 of RESPA does not provide a private right of action and declining to exercise supplemental jurisdiction over the remaining state UTP claim.
mortgage companies, asserting claims under Section 10 of the RESPA, 1 the Racketeering Influenced and Corrupt Organizations Act ("RICO"), the Louisiana Unfair Trade Practices and Consumer Protection Act ("UTP"), and state antitrust laws. The State's action stemmed from the mortgage companies' alleged practice of requiring homeowners to deposit funds in mortgage escrow accounts in amounts that exceed the amount permitted by federal law or by the homeowners' mortgage contracts. Due to the number of common claims against numerous mortgage servicers, the State in its initial complaint sought to certify a class with Litton/BISYS named as class representative. Prior to an answer being filed, the State amended its original complaint to include federal antitrust claims.
Following the court's dismissal but before final judgment was entered, the State filed two motions for leave to amend its complaint,--for the third and fourth times--asking to reassert the RICO claim, reinstate the RESPA and state law claims, and add additional defendants. The court denied these motions to amend, reasoning that, as the earlier order of the court had dismissed the State's entire action there was nothing left for the State to amend. The court also concluded that the State's attempt to reassert the abandoned RICO claim, when viewed in conjunction with other circumstances surrounding the case, was indicative at worst of possible bad faith or dilatory motive, or at best, of inartful pleading, thus providing the court with substantial reasons for denying the motions on the merits.
We review de novo a dismissal of a complaint for failure to state a claim. 2 And, although we review a district court's denial of a motion to amend for abuse of discretion, 3 we review de novo that portion of a district court's denial of the motion to amend that rests on a question of law: here, whether the court's order constituted a dismissal of the State's entire action or merely dismissal of specific complaints.
The State challenges the order dismissing its complaint based on the court's conclusion that Section 10 of RESPA does not imply a private cause of action. Relying on the Cort v. Ash 4 standard for determining whether a private right of action may be inferred from a particular statute, the State insists that Section 10 clearly does imply a private cause of action. 5
Applying Cort 6 intent to create a private right of action generally augurs against implying a private cause of action.
The circuits are split on this precise issue. 7 After considering the opposing position of Vega v. First Federal Savings & Loan Association of Detroit, 8 we find most persuasive the Seventh Circuit's well-reasoned opinion in Allison v. Liberty Savings. 9 In reaching its conclusion that Section 10 of RESPA does not create a private right of action, the Allison court acknowledged the Cort test, yet recognized that the central inquiry for determining whether a statute creates a private cause of action is whether Congress intended to create a private remedy. 10 Observing that Congress explicitly provided federal private remedies in other sections of the Act but not in Section 10, and that there was no legislative history on the issue, the Allison court concluded that when "analysis of the statute itself weighs against implication of a private cause of action and the legislative history is silent, we must conclude that Congress did not intend to create a private remedy." 11 The court stopped its analysis at that point, noting that "once we have concluded that Congress did not intend to create a private remedy, our inquiry is at an end." 12 In addition to the reasoning of Allison, we are persuaded further by the fact that when Congress did amend Section 10--which occurred after Allison--it added penalties for violations of a different provision of that section but not for violations of the provision limiting escrow deposit accounts. 13 We also note in passing that four district courts sitting in three additional circuits have adhered to Allison when concluding or observing that Section 10 of RESPA does not imply a private right of action. 14 We are comfortable in
deciding for this circuit that there is no private right of action under Section 10 of RESPA.
The State urges us to hold that the district court erred in denying the State's motion for leave to amend on the ground that the earlier dismissal terminated State's entire action, not merely the RESPA and UTP complaints. The State contends that, as the order granting the Defendants' motions to dismiss gave no indication that the court intended to dismiss the State's entire action, the order dismissed only the complaint; thus, it was proper for the State to seek leave to amend its complaint. 15
We stated in Whitaker v. City of Houston 16 that, unless a district court order states expressly or by clear indication reflects the court's intention to dismiss an entire action, the order dismisses only the complaint and a plaintiff may seek leave of court to amend. 17 Here, the dismissal order stated only that "[i]T IS ORDERED that Defendant BISYS Loan Services, Inc.'s March 18, 1994 Motion to Dismiss, argued before this Court on April 6, 1994 is hereby GRANTED." A literal reading of this order reflects that the court intended to grant the Litton/BISYS motion, which in turn literally was a motion to dismiss the State's second amended complaint. The docket sheet supports this literal reading in that it records the dismissal order as granting BISYS' motion to "dismiss the State's second amended complaint."
Finding that the court order dismissing the State's complaint neither expressed nor indicated clearly that the court intended to dismiss the State's entire action, we are constrained by the teaching of...
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